Arnold Weinstock rose from humble circumstances in London's Stoke Newington to become the guiding force behind one of Britain's largest manufacturing companies, GEC. He was knighted by Labour and ennobled by the Tories. GEC was very much his creation: he acquired it piece by piece and presided over it for more than 30 years. From the summer of 1962 to 1996, he was the company's managing director and its undisputed ruler - some would say tyrant. Those around him, save perhaps his loyal friend Sir Kenneth Bond, seem to have found it difficult to register a presence. Weinstock has been described as Britain's, even Europe's, most remarkable postwar businessman.
He has now attracted two biographies. As their titles might suggest, both are portraits of GEC, too - so inextricably connected are the fates of the man and the company. Both volumes give us a glimpse of the character of a remarkably complex, not to say contradictory, man and of the evolution of a no-less-remarkable company. But, as both books recognise, it is necessary also to take into account the problems facing British manufacturing industry over the same 30-year period. A period, let us not forget, of relative national decline and even, in the later years, of absolute decline in industrial performance.
In this context, was Weinstock, as some would have it, the saviour of the British electrical engineering industry, securing it from a fate similar to that which beset the car and machine-tool industries, or did he, rather, create a lumbering giant without which we would all have been better off? In particular, did he in the 1980s fail to grasp many of the opportunities presented by the microchip and computing revolutions? These are important questions, not only in assessing Weinstock's role but in understanding a peculiarly significant period in Britain's economic history. Unfortunately our authors are unable to provide unequivocal answers, but they seem united in their conviction that early success was followed by a period of more questionable achievements. But why so?
Both books make liberal use of quotations from Weinstock's ex-associates. One gains the impression that those who came into contact with him split rather neatly into those who experienced him at first-hand as a hectoring bully and those who did not. Certainly, in dealing with others he seems to have defied most of the canons of good management preached by business schools. But then Weinstock was not one to give much credence to anything coming from that direction.
Contemptuous of personnel management and the hype about "human resources", Weinstock appears to have developed his managerial philosophy early in his career while running his father in-law's company, before its incorporation into GEC. This fortuitous acquisition, from his point of view, enabled him quickly to take the whole crumbling edifice into his own hands and to introduce his personal and idiosyncratic style of management. Years ahead of its time, he installed what we now term "lean management", whereby line managers were given their head and monitored almost solely through their financial performance. GEC became, in effect, a holding company supervising over the years a varying number of near-autonomous units. This allowed Weinstock to run GEC from a notably modest headquarters. The policy of operational devolution, matched by financial caution from the centre, never left anybody in doubt, though, about who held the purse-strings and what failure to meet targets would entail. Described by some as management by fear, Weinstock's approach nevertheless seemed able to inspire both enthusiasm and loyalty - particularly from those who either by their own efforts or by luck met their targets. But did it work? What is the record?
Unfortunately, neither book is strong on statistics. What both make clear is that over the 30-year period of Weinstock's stewardship, sales rose from Pounds 147 million to Pounds 11 billion, profit from Pounds 6 million to Pounds 1 billion and the bank balance, initially empty, grew to Pounds 1.4 billion. Even allowing for inflation, this looks like a pretty good performance. Of course, employment fell from about 228,000 to 57,000 - but this is what we might anyway expect during this period of increasing labour productivity.
The shareholders seem not to have done badly either: GEC out-performed the stock-market average over the 30-year period; however, the favourable balance of the performance came before the 1980s. Across-the-board comparisons of this sort are necessarily rather crude, but finer-grained comparisons are difficult to make because of a dearth of comparable companies (GEC having acquired them). International comparisons can be made but are hazardous. Be that as it may, post-1980 comparisons of the performance of GEC with GE (United States), Siemens (Germany) and ABB (Sweden) tend to suggest that Weinstock's early successes were not maintained in later years. Neither book really provides an adequate analysis of these matters, though Alex Brummer and Roger Cowe are more informative.
If Weinstock's stewardship was outstanding early on but later began to slip, what went wrong? The quick answer is that his leadership proved effective in a period when he was expanding GEC by acquisition, often with the tacit support of governments of both right and left, but became an impediment afterwards. Nobody can doubt that GEC was both helped and hindered by its close association with the Ministry of Defence. GEC grew powerful on the back of cost-plus contracting and in a period where the received wisdom saw strength in size and market power.
Conglomeration conferred power on GEC and provided a suitable vehicle for Weinstock's style of management. Nobody was more adept in handling relationships with government. It did not matter whether there was any economic logic behind the conglomeration, so long as each unit was run pretty efficiently. Furthermore, little thought was needed to anticipate changing markets. All this, of course, changed in the 1980s. International competition sharpened post-1989; defence contracting was no longer as certain and the telecommunications; and computer-related markets exploded in difficult-to-predict directions. It is not clear whether either GEC or Weinstock was up to the challenges.
GEC, operating in telecommunications, power engineering and defence electronics, may well be a conglomerate that has outlived its time. Even if it has not, the legacy of Weinstock's style of management, which precludes the possibility of reaping any economies of scale across the independent divisions, will be an effective hindrance to risk taking.
Both of the books under review suggest a story of this kind but, tantalisingly, neither substantiates the plot in an entirely convincing way. No doubt Weinstock himself would present a very different interpretation.
Peter Abell is director, Interdisciplinary Institute of Management, London School of Economics.
Weinstock: The Life and Times of Britain's Premier Industrialist
Author - Alex Brummer and Roger Cowe
ISBN - 0 00 255676 6
Publisher - HarperCollins
Price - £24.99
Pages - 343